MediaTek Eyes Smartphone Rebound

Four new TSMC-made 12nm SoCs primes company for strong second half of 2018, says MediaTek CFO.

TAIPEI — MediaTek expects a rebound in its share of the smartphone business on gains with four new SoCs it will launch during 2018.

The outlook is in line with a Gartner forecast that mobile phone shipments will return to growth this year with a 2 percent increase to 1.9 billion units worldwide. MediaTek estimated that its 2018 smartphone shipments will grow by more than 5 percent from last year.

“By the second half, we should see demand picking up,” MediaTek CFO David Ku said on a conference call to announce the company’s fourth-quarter 2017 results. “We will be able to gain market share.”

During this year, MediaTek plans to launch four chips made on the 12nm process at Taiwan Semiconductor Manufacturing Co. (TSMC). MediaTek has launched a lower-cost modem architecture integrating a CDMA modem for 20 percent board savings into its 16nm Helio P23 with a CAT 6 modem, and in the fourth quarter of last year introduced a refreshed version of the entry-level MT6739 made on 28nm for low cost.

This year, the company will introduce its Helio P40 and P70 chips at the Feb. 26 Mobile World Conference to re-enter the mid-upper tier where it competes with Qualcomm. During the second half of 2018, MediaTek will launch another product in the flagship Helio line and upgrade an entry-level chip made on the 12nm process. The P70 will have a CAT 12 modem, and the P40 will have a CAT 7 modem.

“MediaTek lost almost all the share in this category in the past year to (Qualcomm’s) Snapdragon 630/660, though it should gain share back with the new modem as it competes with Qualcomm, which will have its Snapdragon 636/670 built on Samsung’s 10nm,” according to Credit Suisse analyst Randy Abrams in a Feb. 1 report provided to EE Times.

While Apple prepares this year to use TSMC’s 7nm to make its latest application processors for new versions of the iPhone, MediaTek, also one of TSMC’s largest customers, is playing it safe at the 12nm node. MediaTek is aiming its mid-range products for smartphones sold in growing markets of middle-class consumers in nations like India and Brazil.

Supply Glut
MediaTek may face some headwinds in its effort to recover.

For its part, Qualcomm, MediaTek’s largest rival, sees a backlog of inventory in China and lower orders. China’s Ministry of Industry and Information Technology has reported that 2017 shipments of smartphones in the world’s largest mobile phone market fell by 12 percent from the year-earlier period, and the nation’s top brands are slowing channel expansion to manage excess inventory, according to the Credit Suisse report.

In 2017, MediaTek shipped about 440 million chips for smartphones and tablets, about the same number as it did in 2016.

MediaTek is likely to see some share recovery with its traditional customers in China such as Oppo, Vivo and Xiaomi, according to Credit Suisse. The gradual introduction of more on-device AI functions in MediaTek’s mobile and digital home products may come as smartphone users take advantage of better imaging, software and eventually on-device augmented reality features that Google is creating for Android.

A potential merger of Broadcom and Qualcomm may benefit MediaTek, according to Credit Suisse. Price competition might decrease as the merged entity would focus more on profitability by pruning low-margin product lines, the report said. MediaTek might also try to acquire some hived-off operations of the merged entity to stave off competitors and boost profit in the 4G business, according to the report.

Shift to IoT
In addition to its core smartphone business, MediaTek has been shifting more of its business to chips for IoT, game consoles and ASICs that account for about a third of the company’s total revenue.

The company has christened a “growth segment”, including IoT devices that MediaTek sells to new customers such as Amazon, Google and other Chinese internet companies that MediaTek declined to name. The company said it also has made chips, including ASICs, that go into game consoles for Sony and Microsoft.

The growth segment should continue to expand at a 20 percent pace with drivers including Amazon voice assistants, custom game console ASICs, power management and IoT devices, according to Credit Suisse.

—Alan Patterson covers the semiconductor industry for EE Times. He is based in Taiwan.